Q3 2022 Telus Corp Earnings Call

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The conference is now being recorded.

[noise] good morning, everyone and welcome to the Telus 'twenty two.

Two Q3 earnings conference call I would like to introduce your speaker Mr. Robert Mitchell. Please go ahead.

Hello, everyone and thank you for joining us today, our third quarter 2022 results news release, MD&A and financial statements and detailed supplemental investor information were posted on our website. This morning at Telus Dot Com slash investors on our call today, we will start off with remarks by Doug and Darren and they will be joined by the Telus leadership team for the Q&A portion of the call.

Briefly on slide two this presentation answers to questions contain forward looking statements that are subject to risks and uncertainties and made based on certain assumptions. Accordingly actual performance could differ from statements made today. So we ask that you do not place undue reliance upon them, we disclaim any obligation to update forward looking statements, except as required by law and we refer you to the risks and assumptions.

As outlined in our public disclosures, including our third quarter 2022, MD&A, our annual 2021 M D and E filings with Securities commissions in Canada, and the U S with that over to you Darren.

Thanks, Raul and Hello, everyone in the third quarter. The Telus team. Once again demonstrated continued execution excellence characterized by the potent combination of industry, leading customer growth, resulting in strong operational and financial results across the business.

Our robust performance reflects the chemistry of our globally, leading broadband networks and customer centric culture, which enabled us to deliver total mobile and fixed customer net additions of 347000 up more than 8% on a year over year basis, and our strongest quarter on record.

This reflects strong demand for our superior bundled offerings and customer service over our world leading broadband networks.

Furthermore, our leading customer growth is underpinned by our consistent industry best client loyalty across our mobile and fixed product lines.

Notably again this quarter and for eight of the last 10 quarters blended mobile phone pure fiber Internet security and voice churn were all at or below 1% on the churn front.

Moreover, since the onset of the pandemic at the beginning of 2020, we've now welcomed approximately two and a half million new mobility and wireline customers.

This represents a significant industry leading results outpacing our next closest peer by a multiple of more than two times.

Their opinion, our financial performance to date and of course well into the future.

In the third quarter Telus achieved strong consolidated revenue growth of 10%, while EBITDA was higher by 11%.

Strength in our core telecom operations continues to be complemented by growth in our highly differentiated technology oriented businesses.

Let's turn now to have a look at our mobile operating results.

Telus achieved healthy customer growth of 274000 net additions.

Included strong mobile phone net additions of 150000 up 11% over last year, representing our best quarterly result since 2010.

Notably this strength was driven primarily by loading on our premium brand, reflecting our continued focus on high quality and profitable customer growth.

It also included record high connected device net additions of 124000, which were up 13% on a year over year basis.

Importantly, our team delivered another quarter of industry best loyalty results, which continues to be the hallmark of the Telus organization and our customers first culture.

Blended mobile phone churn was zero that 95%.

Moreover, our industry, leading postpaid mobile phone churn of $0, 76% represents the eighth quarter out of the last 11 that we've achieved the churn rate below zero down 8%.

Our consistently strong operational and financial performance is buttressed by our highly engaged team that is passionate about delivering superior service offerings and digital capabilities over our world, leading wireless and pure fiber broadband networks.

More than ever before Canadians value fast and reliable connections.

Notably in August independent Global Analytics company open signal named Telus as Canada's best provider brick consistent mobile network quality.

This recognition makes tell us the most awarded network in Canada, and one of the most awarded globally by open signal with this being the 11th consecutive award of the silk.

Furthermore, in October U S. Based fuqua recognized Telus is the fastest mobile provider in Canada in their Q3 network performance report also representing the 11th consecutive time Telus has received this recognition.

These acknowledgements alongside the numerous other third party network awards that are skilled and dedicated team has earned reinforce <unk> leadership in terms of offering customers the fastest.

Most expensive and the most reliable service in Canada across both our wireless and our pure fiber networks.

Moreover, this recognition of <unk> National broadband network leadership underscores the value of our significant generational investments and world leading network technologies.

These investments will continue to drive extensive socio economic benefits to Canadians as well as meaningful future free cash flow for decades to come.

Just like fiber is doing now and we will do into the future copper did in the past and look how long we generated those returns and dined out on them what fiber did for us historically.

It's going to be a fantastic performance for us on a go forward basis in terms of the build that started way back in 2013 on the pure fiber front.

The close on mobile third quarter ARPA was up two 3% as compared to last year, continuing the year over year growth momentum that we had seen so demonstrably in recent quarters.

Was supported by higher domestic monthly recurring revenue driven by step ups to our unlimited data offerings, including increased adoption of <unk> plus plans as well as customers clearly recognizing the superior value inherent in our <unk> speeds and the tech.

<unk> that underpins it.

Harpoon is driven by our focus on premium customer loading, it's driven by our effective base management and it's driven by our continued strong Iot growth. In addition to roaming revenues that we're now seen returning to the organization as a.

<unk> increased international travel volumes as Covid restrictions have eased.

Notably mobile phone lifetime revenue of over $6200 continues to be significantly higher than our peer group reflective of the combination of our consistent focus on high quality customer growth and leading client loyalty.

Let's take a look now at our fixed operating results.

Telus delivered another quarter of industry best wireline customer growth.

We achieved healthy third quarter Internet net additions of 36000.

This is indeed, a healthy result, as we continue to deliver on our strategy of driving high quality customer additions and multi product penetration with the year over year decrease primarily resulting from continued normalization of the market, including higher churn in.

Post COVID-19 restriction environment.

We continue to drive strong growth in TV with industry, leading net additions of 18000.

This is up 80% over the prior year, despite modestly higher churn compared to the very low rates that were realized during heightened pandemic restrictions.

Furthermore, our residential voice was a very positive story this quarter with Q3 line losses of only 6000 down more than 45% on a year over year basis.

This led the industry by a wide margin and marks the best voice result that we've seen since the third quarter of 2004.

Notably this reflects our successful retention of our high margin product line and the product intensity momentum that we continue to achieve and the inherent churn benefits.

Strong security net additions of 25000 this quarter further supports our expanding product intensity.

Overall industry, leading external fixed net additions of 73000 were relatively steady year over year in spite of modestly higher churn as the market normalizes post COVID-19 restrictions.

This result, and these performance attributes reflect the strength of our unique and highly attractive bundled offers across our industry best portfolio of products and services that is buttressed by our ever expanding broadband networks or <unk>.

<unk> customer centric culture, as well as our strong and highly differentiated social capitalism attributes that truly do underpins our Telus brand.

Now, let's take a look at our Telus health operations.

Including one month of life works, we realized health services revenue in the third quarter of $225 million.

This illustrates the meaningful scale of our health operations as we improve health outcomes for citizens through access to better data analytics that render better health information.

This includes our health care programs that now cover over 16 million lives inclusive of <unk> and reflecting organic growth of four 2 million lives over the third quarter of last year.

And includes executing 143 million digital health transactions during the quarter up 4% over last year.

And it includes earning $1 7 million, new virtual health care members in the last 12 months, increasing our virtual health care members to $4 million, which is up 74% over the prior year.

On September one we completed our acquisition of life works earlier than anticipated.

We are pleased to welcome their employees and customers into our <unk> family and of course, we immediately commenced integration efforts to combine our respective skills and capabilities.

This powerful combination creates a globally, leading end to end digital first employee primary and preventative health care mental health and wellness platform covering more than 60 million lives in Canada, and well beyond across the 100 <unk>.

50 countries.

Customers can now benefit from our team's steadfast focus on providing exceptional customer experiences over our world, leading broadband networks and the data that they generate customers will benefit from our consolidated engineering talent that will incorporate best in class data platform.

Oh geez, the positively impact health outcomes for employees and their families.

And customers are going to benefit from our significantly expanded economies of scope and scale as we drive value creation and the significant expansion of our health capability set.

This includes complementing what works international relationships with Telus International's proven expertise in digital transformation and client service excellence as well as their expansive client base and delivery teams that spanned 30 countries to extend our offerings to cut.

<unk> well beyond the construct of Canada.

Our combined organizations guided by a shared set of values will provide employers with convenient innovative and effective data driven primary and preventative care solutions for employees and their families to proactively manage their health and optimize their wellness.

This includes support for their mental health, so that they have the opportunity to lead their healthiest and most productive professional and personal lives.

Lifeworks brings significant benefits to Telus health and we are focused intensely on integration efforts aimed at crystallizing. These benefits. These.

These include meaningful synergies of $200 million or more over the next three to five years inclusive of revenue synergies and as well approximately $60 million in near term cost and operational synergies.

Let's turn now to tell us agriculture and consumer goods.

Our team drove revenue growth of 29% over the same period last year as a result of our ongoing efforts to integrate and grow this compelling business and all the assets that we're developing across agribusiness animal health and consumer goods and trade optimization.

<unk>.

We are creating significant value as the leading provider of agriculture, and consumer goods technology solutions around the world as we advance the sector's efficiency and effectiveness, including food quality production waste reduction.

Food and retail execution and trade promotion optimization, all being driven through better data analytics.

Let's now turn and take a look at Telus International.

Earlier today Ti once again announced solid double digit revenue growth, coupled with leading profitability and significant robust cash flow in the third quarter.

Notably revenue increased by 16% on a constant currency basis, whilst EBITDA grew by 15%.

These represent solid results against the backdrop of ongoing global macroeconomic and geopolitical uncertainties.

<unk> continued focus on quality profitable growth powered by an attractive end to end set of digital capabilities positioned Telus international as a trusted advisor for Premier digital customer experiences and solutions for its over.

600 global clients.

Last week, <unk> announced an agreement to acquire Willow tree, a full service digital product provider that will significantly bolster ti's front end and design competencies and unlock attractive and significant cross selling opportunities whilst adding new.

New marquee customers and further diversifying ti's enviable list of client partners.

Importantly, willow tree will augment our go to market transformation capabilities in respect of digital.

Loud and software based services that are going to be highly sought after as we progress toward a period of economic recovery in the months to come.

Moore and extremely importantly, Willow tree software development capabilities will enhance <unk> ability to support and materially accelerate telesis own ongoing digital transformation.

And as well support key product development aspirations across our business, particularly within health and agriculture.

Doug is going to have an opportunity to provide further commentary on both T Chek and Telus International's financials in just a minute.

In closing significant ongoing investments in our pure fiber and fiber networks, alongside digital capabilities and data analytics and high growth markets are further enabling the continued advancement of our financial and operational performance strengthening our confidence.

In the robust outlook for our business and the long term sustainability of our industry, leading dividend growth program.

Importantly, the seven 2% year over year dividend increase announced today represents the 23rd increase since we initiated our multiyear dividend growth program way back in 2011.

Notably our program is now in its 12th year and was recently extended through 2025.

Since 2004, Telus has returned more than $22 billion to shareholders, including those shareholders that are saving for retirement or other life events or they're returning relying on this money further income.

This now represents over $17 billion in dividends since 2004, and this into <unk> equates to $16 on a per share basis.

Future dividend growth and the affordability of that growth is going to be supported by strong EBITDA and free cash flow growth supported by value creation across Telus International Telus health, and Telus, agriculture, and consumer goods businesses as well as Sig.

<unk> reductions and annual capital expenditures, beginning in 2023, leading to meaningful and sustainable free cash flow expansion.

Notably it will also be supported by enhanced efficiencies, resulting from the completion of our copper to fiber migration and continued retirement of our remaining copper infrastructure.

This is complemented by our increased digitization and the other revenue and cost benefits that will come from fiber ubiquity, which represents a significant value differentiator for Telus.

We lead on fiber Expansiveness, and we lead on Digitization and we lead on customer simplification all of those attributes drive significant efficiencies for this organization at the Opex and Capex levels.

Finally, I'd like to recognize the way our Telus team continues to demonstrate that when things are at their worst.

<unk> team is at their very best.

This is highlighted by our team's support for humanitarian and disaster relief efforts. Just this past quarter alone and of course, that's the culture and heritage of our organization and action thus.

Thus far tell us our team members that tell us for any future foundation and our customers have contributed nearly $1 million in cash and in kind assistance supporting those impacted by hurricane Fiona hurricane and flooding in Pakistan and the unrest in Iran.

Indeed, as a leading provider of mental health and well being services, we launched a free 24 seven prices support hotline through life works to support the Iranian community and their loved ones.

Furthermore to help customers stay connected to their family and friends, we waived all long distance and text messaging fees for those at home in Canada, reaching out to friends and families in Iran.

I remain exceedingly grateful for the Telus team's passionate efforts to support our communities across the globe as we strive to deliver outstanding results for all of our stakeholders further exemplifying our leadership in social capitalism.

And on that point yet no.

On the call over to Doug Thank.

Thank you Darren and Hello, everyone, our third quarter results build on our consistent and long tenured operating momentum, reflecting continued execution excellence and supported by our high growth and diversified asset mix.

Network revenue continued to show sequential improvement with Q3, increasing by six 8% year over year, driven by strong customer growth and higher ARPA. Furthermore, as compared to the pre pandemic Q3, 2019 period Mobile network revenue has increased by seven 5%.

Showcasing our strong consistent growth and customer service excellence, we continue to see already a steady improvement in roaming revenue.

With the Q3 amount of approximately 113% in Q3 as compared to pre pandemic levels and up from 103% in Q2.

These improving trends will continue to support our growth as we progress through the remainder of the year and into 2023.

Beyond Romy remained focused on driving sustainable ARPA growth by executing on our five G monetization strategy.

Excellence in base management, maintaining our long standing approach to smart profitable loading and leveraging our leading churn trial profile within the competitive landscape.

Data revenue grew five 4% year over year or nearly 7% when considering the divestiture of our financial services business towards the end of last year.

Within fixed data residential internet revenue grew by 11% year over year as we continue to drive market share gains along side higher ARPA, while customers continue to move to higher speed tiers, and recognizing the compelling value and reliability of our superior pure fiber.

Bundled offerings.

At the beginning of September our team successfully closed the acquisition of Lifeworks earlier than anticipated accelerating the recognition of financial and operational benefits of the transaction health services revenue increased by 73% in the third quarter, including an $87 million contribution from Lifeworks.

The earlier closing date also allowed us the opportunity to accelerate the integration process months earlier advancing our ability to began unlocking the significant synergies of the powerful combination of Telus health and life works, including leveraging Telus International's extensive capabilities and client base.

Our planned acquisition of Willow tree significantly enhances <unk> digital services portfolio augmenting and scale.

In design and build capabilities and current increasing its high value digital services mix and revenue per team member we expect the transaction to close in early January 2023.

Together these transactions represent important steps, we are taking to scale, our high growth technology oriented business.

Further setting us apart from our global peer group and adding capacity for value creation and diversification of our business.

At the segment level <unk> external revenue was up nine 3% over last year and adjusted EBITDA grew eight 1% for the quarter Lifeworks contract contributed approximately 2% of the growth in revenue and 1% on adjusted EBITDA.

<unk> external revenue was higher by 14% year over year, and adjusted EBITDA was up 36%, while margins improved 380 basis points to approximately 25%.

Altogether consolidated revenue increased 10% year over year, and adjusted EBITDA, 11% with margins improving by 30 basis points to nearly 37%.

Consolidated net income was up 54% year over year, while basic EPS grew 48%.

This strong growth was driven by higher EBITDA lower financing costs, partly offset by higher depreciation and amortization and as it relates to EPS higher shares outstanding.

During the quarter, we observed an unrealized benefit included in our financing expenses related to our virtual purchase power agreements totaling $151 million on an adjusted basis. Excluding this benefit net income and EPS were higher by 20% and 17% respectively.

Free cash flow of $331 million was.

In Q3 was up 63% over last year, driven by higher EBITDA and a decline in capital expenditures from lower investments as we near the completion of our accelerated broadband build and as we start to align our run rate to a reduced 23 capital spend.

As outlined in our press release today, we are updating our consolidated financial targets for 2022.

Our domestic core telecom business continues to perform very well benefiting from our world, leading wireless and pure fiber networks and customer service excellence. We expect life works to have a similar <unk> monthly percentage impact on revenue and EBITDA in Q4.

Our customer.

Our customer wireless contracts from lower mobile handset sales volumes were lower as a result of fewer customers requiring a new handset in our customer growth and within our existing base as well as the success of our certified pre owned handset sales.

This resulted in less handset revenue year to date and is expected to be lower than planned for the full year. When we set the guidance back in February .

This trend will be accretive to free cash flow is less handsets need to be financed or subsidized than planned when we set our original guidance.

At Telus International the current macroeconomic environment is influencing customer spending in the near term leading to a ti update on their outlook for 2022.

Accordingly, Ti continues to target robust double digit revenue growth and a leading margin and cash flow profile. Please see <unk> announcement earlier today.

As we consider.

The inclusion of life works the strong results that we saw in our current business the impact from the lower mobile equipment revenues as well as account for <unk> updated outlook. We are now targeting for the full year consolidated revenue to be approximately 8%.

Tightened the range on adjusted EBITDA growth to 9% to 10% capital expenditures for 'twenty, two will be expected to be $3 $4 75 billion, including additional capital for life works.

And free cash flow now being increased to approximately $1 3 billion above our original guidance range of one to $1 2 billion more than offsetting the increase in capital.

Lifeworks did not have any impact on our higher free cash flow outlook for the quarter and the year outlook.

Full year impacts in 2023 of Lifeworks and military we will be will be included in our February guidance release.

During Q3, the team successfully issued $2 billion of new debt securities across three different maturities, including our third sustainably sustainability linked bond, making tell us the larger largest issuers astellas sustainability linked bonds in Canada.

This offering was met with high investor demand within a very dynamic market environment and further demonstrates our strong success and access to the capital markets as well as advance our growth strategy importantly, our balance sheet remains strong at the end of the quarter. The average cost of our long term debt remained at a low.

<unk> $3, 95%, reflecting.

How our team has successfully leveraged the low interest rate environment over the past decade to accelerate our growth strategy, including our meaningful investments in wireless spectrum, and our generational pure fiber build which is nearing completion.

We have a strong debt maturity schedule.

With an average maturity of our long term debt of over 12 years and no significant debt maturities until 2024, our balance sheet strength will continue to be further enhanced in 2023 with a meaningful increase in free cash flow generation.

At the end of 2022, our accelerated broadband build will conclude setting up tell us to see meaningful positive free cash flow for 2023 and capital expenditures declining to approximately $2 6 billion inclusive of approximately 100 million capex related to life works.

Fortunately our capital investments are going to long term infrastructure based assets that will yield positive operational and financial results for decades to come.

As we progressed through the quarter and for the rest of the year and into 2023, our team remains highly confident of our growth trajectory and long term strategy to plan and further advance our leading growth profile building strong value creation, along the way Robert back to you. Thanks, Doug <unk>, we're ready for questions.

Yeah.

Alright first question comes from Maher Yaghi from Scotiabank. Please go ahead.

Thank you. Thank you guys.

I would say, it's hard to find a telecom company was in a mature market with this type of growth. So.

Congratulation.

But that happens and.

And.

When looking at the balance sheet and Doug you mentioned the strength that you see going into next year.

But one has to.

Maybe question a little bit how fast can you de lever the balance sheet, because we've senior debt.

Ratio go from <unk> to about $3 six now if I include that.

The most recent acquisition.

Willow trees so.

Five approximately half a turn.

In terms of the balance sheet, how should we look at that.

Delivering process, how quickly can you deliver that balance sheet and in terms of the share count also we're seeing an uptick because of Chris. So maybe if you can give us a sense of where should we look at those two metrics and 2023, especially with the spectrum auction coming up and my second question quickly on <unk>.

<unk>.

Can you maybe give us.

A view as to what caused the increase in churn is it mainly prepaid or you also saw an uptick in <unk> and postpaid churn. Thank you.

Okay, Doug Doug will take the first part and then Jim will take the second part.

I'll start at the back of your question and move forward. The drip we were going to keep in place until after the spectrum auction is over at the end of next year and then we'll make our assessment after that date from Delevering perspective, all of the investments. We've made are extremely strategic there've been smart investments that provide long term.

<unk> as Darren highlighted and I highlighted in fiber <unk> spectrum and acquisitions that diversify our organization built for future growth and generate very very significant free cash flow into the future the reduction of the capital.

That we had discussed also leads to 2023 acceleration of free cash flow. So we will continue to delever very quickly.

Starting in starting next year.

Ti and you would have seen their leverage go up to three <unk> and it will delever very very quickly as well as they always do with low capital intensity. So from that the fact that we've got the reduction in capital. We are growth engines from health to AG to Ti all contributing none of them around in the negative J curve anymore contributing to <unk>.

<unk> growth the execution within our base and the capital reduction we're very confident that we'll continue to delever in a very quick and appropriate way.

And that's why we have the ongoing confidence in our balance sheet and the ongoing confidence in our business.

And on churn.

Postpaid churn was seven.

<unk>, six which was pretty much flat year over year.

<unk> churn was $2 three six which was up 31 basis points and that was largely due to some transient activations during the Rogers outage.

And.

And a bit of of the travelers segments.

So we were pretty comfortable we had very strong lifetime value again, and the one thing that I would like to mention.

As we continued our focus on premium loading, which is what's helping our domestic <unk> and in the quarter.

Our premium brand net ports were up dramatically and we had two times the premium net ports versus any of our competitors.

And maybe one just quick top up to my answer on this does reinforce our maturities next year less than $500 million and after that again, it's a balanced maturity ladder. So we have very little.

Needs or requirements for financing over the next two years concurrently.

Thank you and next question please.

Yes.

Of course, our next question comes from Stephanie price from CIBC World markets. Please go ahead.

Hi, Good afternoon, just following up on <unk> question around the fiber investment cycle nearing completion, hoping you could talk a little bit about your thoughts on the uses of excess capital around.

And return of capital to shareholder versus future M&A et cetera.

Hey, Stephanie.

Take this one youre quite correct if you look.

At our fiber footprint, the copper component within that.

Is in the low single digits.

Percentage and of course, that's going to unlock significant value for us on a go forward basis number two we are entering a period, where the sources of cash are going to chronically exceed the uses of cash.

In terms of this organization, we like our dividend growth model.

As the most efficient and effective form of returning cash to shareholders.

Secondly, we want to retire debt.

Along the way I think it's interesting to note that when we began the fiber build program.

Over a decade ago.

Our cost of debt and our average term to maturity at that time, the cost of debt was over 5% and the average term to maturity I think it was about five three years.

Now, we've got a cost of debt around 395% on average and the average term to maturity is 12, one years, which profiled quite well the return of the.

Fiber in terms of revenue and margin generation versus the expense on the capital investment to bring it to fruition.

And then thirdly.

We want to put the money to work on selective M&A to support the continued scaling and value creation at Telus International tell Us AG and Telus health.

So we would see us taking excess cash and putting that money to work as it relates to the key growth engines of the organization beyond the excellent value that we're creating right now within our core business. The interesting thing about that latter comment is while we spend money too.

Invest in scaling and growth at Ti Aegean health.

AG and health linked Ti are also poised to return capital as those valuations from a scaling point of view come to fruition and we think about undertaking public market events for both the AG and the health businesses. So I think it's quite an exciting to a story in terms of investment in.

Value and scale realized and cash returned yet again to the shareholders and that's what really differentiates telus on a global basis because I.

I would challenge you to.

To find another company in our sector that does as well as what we do on core growth.

Whether it's operational loading and customer service or the financial results that a company that or the fact that we have two growth engines, one on wireline and one on wireless.

And then complement that with exacting and exciting value creation on emerging businesses from Ti to health to AG and then complement that.

With a dividend growth program.

<unk> is now going on from 2011 through to 2025, I, just don't see that diversified performance at core.

The exciting growth prospects, but prospects and possibilities across Ti health and AG.

And then returning cash to shareholders at a level that really has no parallel.

That eclectic combination really does make us unique.

That's helpful color, maybe just one follow up for me on the fiber rollout.

Your thoughts on the homes in your footprint that were not originally targeted by the fiber and how you think about rolling those out over time.

Yeah.

What do you mean, the homes that were not originally targeted by fiber are you talking about homes outside the fiber footprint that we would reach with <unk> wireless HSI eh.

Or converting those to fiber in the future I guess is my question, Okay, why don't I take a breakdown.

Hand, it over to Zane I'll now she's got a particular passion on this pizza subject matter.

Why don't you kick in and answers Stephanie's question.

Okay. Thank you.

I think the first thing I would say is that while our footprint completion.

Print is nearing completion on fiber, we're continuing to make pure fiber investments. So as new home growth continues and there are pockets of build that we are continuing that are within our capital guidance that Doug spoke to so we will continue to see footprint expansion within our.

<unk> fiber footprint and will continue to drive the copper to fiber migration with the speed and alacrity that we have done so far the second point is that we have a healthy wireless high speed opportunity that we developed several years ago and that will expand with the rollout of <unk>.

And that will continue to enable us to.

Be at the forefront leveraging new footprint in rural areas, particularly and then the third thing I would say in where our passion really lies to Darren point is around ensuring that we continue to drive rural and indigenous footprint, we've been very assertive in our applications on the universal.

<unk> fund, where we had a high the highest level of completion against that portfolio against our peer group in terms of completion actual connected customers and it's a significant drive in our social purpose to ensure that we continue to achieve.

<unk> connectivity for our rural and indigenous customers and then there is such a great synergy there with the rest of our capabilities. When you look at AG Tech when you look at health.

So we will continue to drive those investments and leverage our assets across fiber and <unk>.

Great.

And Stephanie because you've struck a chord with me, perhaps something that that I didn't realize.

Within the $2 6 billion capital envelope prospectively in 2023, which will excitingly for investors see us take our capex intensity down into the low teens I didn't think I'd still be here to say that but there you go you're hanging around long enough, sometimes good things like that happen, but included within that $2 6 billion.

Envelope is hundreds of millions of dollars that will still be spending on fiber expansion.

And perhaps we haven't been as definitive about that as we should when we talk about expunging copper, it's easy for people to assume okay. We're just now going to halt our fiber build and stop that that's not the case, we will still be spending hundreds of millions of dollars on fiber expansion as well as fiber upgrades to <unk>.

Along the way.

So we can take one gig two five gig services to 10 gig, but I think that's exciting for investors to say well you can take your capex down to $2 6 billion and Youre still making material investments in both fiber upgrades and fiber expansion, which of course will eventually also reduce in time, along the way and the neat thing for us.

Now in terms of fixed cost infrastructure is that the incremental expense to upgrade to something like <unk> PON to get to those 10 gig speeds. It's a de minimis investment. So we really have broken the back of this challenge, but it does continue to include significant investments in fiber.

Pension and upgrades.

Great. Thank you. Thanks.

Stephanie next question Matt.

Of course, our next question comes from drew Mcreynolds from RBC capital markets. Please go ahead.

Yes, thanks, very much and good.

Good afternoon.

Good morning, So two from me first on the fixed data services revenue growth.

And I guess in the deck you exclude th th.

From that I mean, obviously very good looking at your core telecom business. So I appreciate that disclosure and I think Doug in your remarks, you talk about a 11% growth in consumer or residential.

So the question around that dynamic I think qualitatively, we all understand the drivers of that just because we don't know the ebb and flow is.

Is this something you're confident in sustaining through let's say the next year or so and then secondly.

And separately.

Obviously cost inflation is something that needs to be managed by everyone but.

When I look at Telus.

Does appear that you're further along euro appears on Digitization and that journey for tell us.

In stuff like cloud migration et cetera. So just wondering if you can give us an update on where exactly you are on that journey.

As you look forward. Thank you.

Alright, Doug why don't you hit the <unk>.

7%, 11% and the diversity of quality performance that underpins the sustainability of that number.

We do expect to see a sustainable proportionate to that as we're getting more.

The our customers on fiber as we've talked about you do get.

Higher <unk> in addition to the.

The other benefits of cost reduction and and churn reductions.

We have seen good loading.

On on our intranet and security base through that period.

And having the product sets that we have that we're able to bundle.

On the <unk> side through <unk>.

Through the product that's in the best in market, we're going to continue to see that growth at very good levels along the way.

And then you are seeing a selection to the the higher rate plans and unlimited speed tiers as we talked about so seeing the benefits of our fiber initiative is going to continue to drive that for the foreseeable future.

And on the inflation front and I think for me. This is maybe the.

Most exciting set of attributes as it relates to value creation at tell us versus our peers.

We like what's going on on wireless in terms of what we're seeing on the <unk> improvement upfront, both absolute you'd tell us in <unk> and.

And relative to our peers, given our focus on quality.

Our strength as it relates to both bundling and retention.

Like the upside in terms of roaming, but as I noted in my comments.

Recurring revenue within the domestic context continues to be quite strong.

And I am very bullish on our nine digit Iot business within the <unk> construct and so I.

I think that looks pretty healthy then I'd turn and look at the cost infrastructure for <unk>.

Our wireline business.

And that confidence grows clearly as a result of bundling, we're enjoying cost economies of scope.

And given the broadband connectivity we have.

The marginal cost as it relates to adding new products to that continuum is extremely attractive and we will be adding new products to that continuum. Now. We're also launching a new entertainment platform with our Opus project that will materially reduce our cost infrastructure and term.

Of entertainment delivery.

Then you look at the conversation that we just been having on on fiber.

And just plow through the attributes the average margin per home on fiber is 20% better.

Our historical copper footprint that the lifetime revenue on fiber is 30% better.

Cost to serve on fiber is significantly reduced the facilitation of Digitization to your point and the entire automation of the product and service continuum is made a hell of a lot easier by fiber.

Even if I take an ESG investing back to this.

The energy appetite of fiber versus copper is 80% less and.

So that's.

That's quite a compelling set of attributes then you look at the <unk> component, which was.

A pretty unique tell the story it was a hard road to hoe for us since 2014 with the economic impact in the Western Alberta economic impacts on the sectoral front within oil and gas that business was profit dilutive.

For many many many years since 2014 in that business now has turned profit accretive.

Nice to see the profit trajectory on <unk> being at 3% EBITDA growth and I would look over the next 12% to 24% to 36 months for us to take that EBITDA growth to 5% or greater.

We are much further progressed on our digital program at Telus than our peer group.

And it's not dissimilar to the story on fiber.

We're not saying that we have some intellectual property.

Not saying that we know better we just started early and stuck with it.

The reason why we are where we are on the fiber front right. Now is we have the guts to make that decision in 2012 in 2013, and we were early movers on digital.

Where our customers first organization and we've got a great leadership team that's dedicated to strong execution and we just leaned into it and we've made a hell of a lot of progress along the way and we did it with a purpose. So it wasn't just digitize digitize. It was digitization to do two things improved customer service excellence and simplify the organization.

Nation, because we were overly complex and with simplification. It's a four point game, you get better customer service and you get better cost reduction.

And then next to that we've got very attractive post acquisition integration synergies on Lifeworks.

I think you might have noticed it used to be $150 million than it was $200 million and I was quite purposeful in the comment, saying, it's 200 million plus now and we're off to a pretty quick start on $60 million of near term operational and cost synergies and of course, then we've got our own tell us cost efficiency program when you <unk>.

Marry that up with our Lifeworks post acquisition integration synergies, that's afford a $500 million cost improvement program that we want to bring to fruition over the next 36 months.

And then next we've got Ti.

Who what are the telco in the World do you know that has an organization like Gi supporting it so when I talked about why we lead on digital Ti is a big big Big answer to that solution. They have been aiding and abetting the acceleration of our digital program, what a fantastic resource.

To have at our fingertips and they help us from hygiene. This self actualization on the hygiene front, they help us with labor arbitrage and what it does and on the self actualized state they accelerate not just our digital progression, but our cloud transformation and they do it with the quality Bend Gi is not cheap and cheerful, it's all about customer.

First customers first in terms of the excellence that they bring and you can see that within their own margins. They are highly differentiated in that regard next it's not just in opex storage. The Capex story, we purposely forecasted for 2023 that Holistically wireless and wireline.

Heading into the low teens for capital intensity.

Thank you.

Two things.

Maturation of our major investments in broadband and the fact that our asset composite at Telus is changing because of Gi health and AG in the Digitization of the organization and increasingly we are becoming a software as a service organization and again I think we lead our industry in that.

Regard and then the last thing in terms of inflation fighters and the like we've got emerging value in scale and margin and profit accretion coming from health and AG Theyre not dilutive right now and they'll become just increasingly accretive in the future and we're looking to those businesses to deliver double digit EBITDA growth occur.

The board.

Comprehensive.

Understood. Thank you guys.

Thanks drew behind next question. Please.

Of course, our next question comes from.

Barry from Vishal Zhang.

Please go ahead.

Yes, happy Friday, and thanks for taking my question I guess with the Willow tree acquisition.

This signals a bit that.

Growth will increasingly come from the tech side not that its suppose surprise, but if you can please discuss a bit how you see the exposure astellas to telecom evolving in the longer term. Thanks.

Okay, we've got.

Jeff on the call.

Given that.

He has dedicated now the rest of his life to growing value for military Jeff Why don't you answer that question.

Thanks, Darren happy to thanks for the question Jerome.

Willow trees client base is rather complementary to Telus International's at a number of ways, including in particular, we only have about five shared customers. So while they certainly do support clients in the tech sector. They also have clients in communications and media and health.

Care and life Sciences financial services consumer goods travel and hospitality.

So we don't see that actually.

Intensifying our client concentration around existing verticals, particularly tech.

<unk>.

Where were today circa 60% of our customers at Ti.

<unk> checking games in.

E Commerce and Fintech, they actually improve.

Our client concentration profile clay about 500 basis points.

So we see this as very complementary and as I shared on our Willow tree specific investor call last week and as I commented on the Ti earnings call just barely an hour ago, we think the revenue synergy opportunity by cross selling Willow tree services into <unk> customer base.

In particular, helping to accelerate and amplify our support for Tullow has his own digital transformation journey that both Darren and Doug spoke to earlier as well as all of our other clients and then vice versa, our ability to sell <unk> services into the Willow tree base just by way of example, we had customer diligence call as part of the <unk>.

<unk>, where I spoke directly to one of willow trees long tenured existing clients and when they learned a little bit about the combination of <unk> Trust.

Trust and safety and content moderation capabilities in particular, they've got quite animated and excited.

There is a reason why we think this transaction is going to be so that's so exciting for us both.

On the road.

Great.

Well, we're talking about Telus international maybe for managing the workload at Telus with the more uncertain demand.

I'd tell us or international can you maybe use excess capacity to accelerate the lifeworks integration or is it more time to proceed with caution maybe.

So we worked diligently to keep our entire global workforce as fully utilized as possible and notwithstanding.

Economic uncertainty and some slowdown in some of our larger tech clients E Commerce and Fintech clients in particular.

<unk> is still out looking 16% to 18% growth top line revenue on a constant currency basis.

Where we have some programs slowing are ramping down our first port of call is to absolutely repurpose those talented team members into other areas of opportunity and that absolutely could be supporting and accelerating our lifeworks integration and transformation. The other parts of the Telus organization.

We look to cross pollinate some of our expertise and experience serving tell us two non <unk> accounts, and then vice versa repatriating best practices in order to be a better partner to both tell us in all of our other clients.

What I can tell you as a customer of Ti.

We are extremely excited by the Willow tree acquisition and what it can do for us on the design and build front and how thats going to get manifested within our digital cloud and software development platforms.

It's also exciting to highlight that whilst the Willow tree customer list is highly complementary to ti.

Greater and a beneficial overlap between the Willow tree customer list and the customers that both health and AG. There's a very interesting overlap there that we're looking forward to exploiting.

Great. Thank you.

Thanks Room next question. Please ma'am.

Of course, our next question comes from Vince Valentini from TD Securities. Please go ahead.

Yeah. Thanks, very much question on T. Chek segment adjusted EBITDA margins. Additionally, the first quarter of this year. They were up 30 basis points year over year second quarter Theyre up 50 basis points now in this quarter. They are down 40 basis points year over year is that just a life works dilution Doug or is there.

Anything else, we should think about there and then maybe more importantly can you give us any thoughts on how much of an upward ramp there should be in that in 2020, Caribbean and beyond especially when Youll fiber holds as Darren just centers, 20% higher margin than the copper homes in Europe . We've done the coffers. So should we see a big step function up in those two.

Tech margin soon.

Yes, so yes, it is substantially the lifeworks awaiting into our results.

And yes, we see upside in margin both as Darren discussed, but also the other areas.

We talked about healthcare in AG as being accretive and Thats, a double digit accretive on EBITDA going into the future, which was not the case in the past.

And you would see business and the business segment and we talked about also having slower growth that is recovering very very well.

So.

Looking forward, we're very optimistic on that margin enhancement there might be some weighting impacts along the way and we will we will try to be.

Very.

Transparent on that as we move forward, but the overall water level level will continue to increase.

Thanks, and just to clarify the guarantees.

Derek.

400 to 500 million in incremental cost savings remove efficiency programs.

Yes, I did the combination of what Telus is doing in our own rate added to the synergies on Lifeworks, that's exactly correct yes.

One last anti I'm sorry event.

Small top off the only other thing was our revenue on handset revenue did increase a bit in Q3 from Q1 and Q2, so as we add a few more renewals during the back to school is special.

They would actually be low margin as well so.

A little bit attributed to that in addition to lifeworks.

Fairpoint lots just tiny clarification type there.

The accelerated Capex for this year was $750 million was the plan I believe 691 has been spent through the first three quarters does that imply it's it falls off significantly in the fourth quarter at only about $60 million and then youre done.

Yes.

Well thank you.

Thanks, Vince behind next question. Please.

Alright next question comes from Arvind <unk>.

<unk> from Canaccord Genuity. Please go ahead.

Thanks for taking my questions two from me.

Just to go back to the fluids and.

Oh geez.

And as you talked about when you kind of look at the next 12 to 18 months call. It low hanging fruit sort of what's achievable during sort of the near term there and maybe some granularity around where that could come from is it is it is the plan to originally sort of attack the Canadian opportunity given those enterprise relationships or.

Is that the U S.

Yeah.

Right for some revenue synergies as well almost straight off the bat wanted to get your thoughts on that and then.

My second question, a smaller one on the <unk> number that language provided 3%.

Is are you able to kind of is that including wireless are you able to provide a ex wireless number that just kind of give a sense of what the enterprise wireline trends maybe.

Sure.

Okay.

Thanks for that.

<unk> got our Chief operating officer for Telus health on the call.

And he has been leading the way.

<unk> integration and the realization of the synergy so I'm going to ask Michael to comment and I'll ask Michael also in addition to synergy realization and the sources.

As it relates to the synergies I would also like Michael to speak to the significant and exciting cross sell opportunities that exist between tell us tell us how life works and Telus International Michael over to you.

Thank you Darren and thank you for the question.

Perhaps let's start with just time demand for health and well being services has never been higher and the combination of telehealth in Lifeworks and improved health outcome as it provides a better preventative health and wellness experiences for people worldwide.

Our teams continue to successfully.

The integration.

And we have a solid start behind us to continue to drive momentum on significant growth opportunities as we go to market as one team.

Now we're confident that we will hit the $200 million of total synergies over the next three to five years, given that we've already identified $60 million in near term cost synergies thus far.

And Moreover, our collective sales teams in collaboration with Ti and TBS have already identified more than 130 joint sales opportunities in the weeks since close.

And I would just add that our focus of course is Canada and North America, and then exporting from our North American strategy to rest of world.

Okay and for the answer to the next question just given you asked for the clarification.

That 3% EBITDA growth, what's holistic so that was wireless wireline combined.

Holistic across our <unk> segments, so from small businesses mid market to enterprise and public sector, but <unk> why don't you give a little bit of additional color on that front.

Okay. Thanks, very much Darren so our PDP business continues to accelerate profitable growth and is actually growing.

Not only EBITDA, but also revenue.

And cash so we continue to retain and grow our customer base given.

The reliability coverage and.

And speed of our global leading networks, both wireless and pure fiber.

And of course, our industry, leading customer experience and are positively differentiated solutions. So our window to your question, we're continuing to outrun our legacy service revenue decline.

Strong growth in.

Both market share expansion as well as increased product penetration both in wireless and wireline our churn remained strong and.

Low and we're well positioned to lead in new <unk>, Iot and industry solutions capabilities. So we expect to see continued acceleration of our profitable growth.

As we close off the year and progress our strategy further into 2023 and that profitable growth is going to come from both improvements in.

Our fixed our wireline segments as well as our wireless segment. So thank you.

Yeah.

Thank you.

Thanks, Sarah vendor I mean, how do we have time for one more question. Please.

Alright next question comes from David Joyce from Barclays. Please go ahead.

Thank you I just wanted to follow up on one of the questions earlier on.

The capital expenditure plans.

Sprint.

Granted you can still do some more fiber expansion.

With new homebuilders, but how can we think about long term.

Much more of.

The population or <unk>.

However, you can help us quantify it.

<unk>.

And what's your available territory, where you could still be.

A growing fiber over the or <unk>.

As a viable alternative.

How can we think about the expansion of your footprint from here. Thanks.

Okay.

Not really given any.

Public guidance on that.

But maybe I can help you with some quick parameters.

Firstly, we don't have the singular broadband solution and fiber, we've got two broadband solutions, one fiber and <unk>.

And I think it's really down to the organization to determine what is the paredo optimal combination of expanding fiber, but also leveraging fixed wireless along the way.

So.

Roughly speaking over the longer term across the totality of the population within our build territory.

<unk> seen fiber to get to maybe 75% of the population, where we would use wireless broadband to cover the remaining 25% of the population I think that's not a bad rule of thumb along the way.

There are some adjustments to that.

If you look at.

What we can do on government programs and leveraging government programs to expand our fiber footprint.

I think thats, an opportunity that would allow us to take fiber penetration deeper into rural communities.

If you look at what we would do maybe on joint cost sharing.

The fiber expansion on rural whether it's with the community.

Or whether it's with the electricity company.

Those are also exciting opportunities to leverage scope economies, along the way or stronger commitments of the communities.

Tony Garen and his team have done a fantastic job in terms of our indigenous coverage.

If you look at Telus, we are a global leader in bringing broadband and digital capabilities to indigenous communities in rural areas across Canada, we have a footprint that second to none in that regard so again that would see us.

Expanding the penumbra of our fiber footprint and then lastly, it's down to some hard economics how.

How much bandwidth do do customers need.

<unk> services are they going to take and if the bandwidth and the services justify it then we can expand the fiber build along that particular path and of course, the other thing that gets forgotten is that <unk>.

Labor and <unk> fixed wireless are not just for consumers.

The extent to which we can leverage b to b opportunities, particularly within the SMB space or certain public sector areas as well that gives us an opportunity for further expansion, but that would give you a sense of how far we could go on the expansion front and how we could smartly leverage wireless broadband.

To close off the final mile.

Alright I appreciate it thank you.

Thank you David and thank you everyone for joining US today, please feel free reach out to the IR team with any follow ups take care and have a nice weekend everyone.

Everyone. This concludes the 2022 Q3 earnings conference call. Thank you for your participation and have a nice day.

Yeah.

[music].

[music].

[music].

Good morning, everyone and welcome to the <unk> 'twenty 'twenty to Q3 earnings conference call I would like to introduce your speaker Mr. Robert Mitchell. Please go ahead.

Hello, everyone. Thank you for joining us today, our third quarter 2022 results news release, MD&A and financial statements and detailed supplemental investor information were posted on our website. This morning at Telus Dot Com slash investors on our call today, we will start off with remarks by Doug and Darren and they will be joined by the Telus leadership team for the Q&A portion of the call.

Briefly on slide two this presentation answers to questions contain forward looking statements that are subject to risks and uncertainties and made based on certain assumptions. Accordingly actual performance could differ from statements made today. So we ask that you do not place undue reliance upon them, we disclaim any obligation to update forward looking statements, except as required by law and we refer you to the risks and assumptions.

As outlined in our public disclosures, including our third quarter 2022, MD&A, our annual 2021 M. DNA filings with Securities commissions in Canada, and the U S with that over to you Darren.

Thanks, Raul and Hello, everyone in the third quarter. The Telus team. Once again demonstrated continued execution excellence characterized by the potent combination of industry, leading customer growth, resulting in strong operational and financial results across the business.

Our robust performance reflects the chemistry of our globally, leading broadband networks and customer centric culture, which enabled us to deliver total mobile and fixed customer net additions of 347000 up.

More than 8% on a year over year basis, and our strongest quarter on record. This.

This reflects strong demand for our superior bundled offerings and customer service over our world leading broadband networks.

More of our leading customer growth is underpinned by our consistent industry best client loyalty across our mobile and fixed product lines.

Notably again this quarter and for eight of the last 10 quarters blended mobile phone pure fiber Internet security and voice churn were all at or below 1% on the churn front.

Moreover, since the onset of the pandemic at the beginning of 2020, we've now welcomed approximately two and a half million new mobility and wireline customers.

This represents a significant industry leading results outpacing our next closest peer by a multiple of more than two times.

Opinion, our financial performance today and of course well into the future.

In the third quarter <unk> achieved strong consolidated revenue growth of 10%, while EBITDA was higher by 11%.

<unk> and our core telecom operations continues to be complemented by growth in our highly differentiated technology oriented businesses.

Let's turn now to have a look at our mobile operating results.

Telus achieved healthy customer growth of 274000 net additions this.

This included strong mobile phone net additions of 150000 up 11% over last year, representing our best quarterly result since 2010.

Notably this strength was driven primarily by loading on our premium brand, reflecting our continued focus on high quality and profitable customer growth.

It also included record high connected device net additions of 124000, which were up 13% on a year over year basis.

Importantly, our team delivered another quarter of industry best loyalty results, which continues to be the hallmark of the Telus organization and our customers first culture.

Blended mobile phone churn was zero that 95%.

Moreover, our industry, leading postpaid mobile phone churn of zero down seven 6% represents the eighth quarter out of the last 11 that we've achieved that churn rate below zero dot 8%.

Our consistently strong operational and financial performance is buttressed by our highly engaged team that is passionate about delivering superior service offerings and digital capabilities over our world, leading wireless and pure fiber broadband networks.

More than ever before Canadians value fast and reliable connections.

Notably in August independent Global Analytics company open signal named Telus as Canada's best provider brick consistent mobile network quality.

This recognition makes tell us the most awarded network in Canada, and one of the most awarded globally by open signal with this being the 11th consecutive award of this ilk.

Furthermore, in October U S based buccola recognized tell us as the fastest mobile provider in Canada and there are two three network performance report also representing the 11th consecutive time Telus has received this recognition.

These acknowledgements alongside the numerous other third party network awards that are skilled and dedicated team has earned reinforce <unk> leadership in terms of offering customers the fastest.

Most expensive and the most reliable service in Canada across both our wireless and our pure fiber networks.

Moreover, this recognition of <unk> National broadband network leadership underscores the value of our significant generational investments and world leading network technologies.

These investments will continue to drive extensive socioeconomic benefits the Canadians as well as meaningful future free cash flow for decades to come.

Just like fiber is doing now and we will do into the future copper did in the past and look how long we generated those returns and dined out on them what fiber did for us historically.

It's going to be a fantastic performance for us on a go forward basis in terms of the build that started way back in 2013 on the pure fiber front.

To close on mobile third quarter ARPA was up two 3% as compared to last year, continuing the year over year growth momentum that we had seen so demonstrably in recent quarters.

This was supported by higher domestic monthly recurring revenue driven by step ups to our unlimited data offerings, including increased adoption of <unk> plus plans.

As well as customers clearly recognizing the superior value inherent in our <unk> speeds and the technology that underpins it.

<unk> is driven by our focus on premium customer loading, it's driven by our effective base management and it's driven by our continued strong Iot growth. In addition to roaming revenues that were now seeing returning to the organization as a result.

<unk> increased international travel volumes as Covid restrictions have eased.

Notably mobile phone lifetime revenue of over $6200 continues to be significantly higher than our peer group reflective of the combination of our consistent focus on high quality customer growth and leading client loyalty.

Let's take a look now at our fixed operating results.

Telus delivered another quarter of industry best wireline customer growth.

We achieved healthy third quarter Internet net additions of 36000.

This is indeed, a healthy result, as we continue to deliver on our strategy of driving high quality customer additions and multi product penetration with the year over year decrease primarily resulting from continued normalization of the market, including higher churn.

In the post Covid restriction environment.

We continue to drive strong growth in TV with industry, leading net additions of 18000.

This is up 80% over the prior year, despite modestly higher churn compared to the very low rates that were realized during heightened pandemic restrictions.

Furthermore, our residential voice was a very positive story this quarter with Q3 line losses of only 6000 down more than 45% on a year over year basis.

This led the industry by a wide margin and marks the best voice result that we've seen since the third quarter of 2004.

Notably this reflects our successful retention of our high margin product line and the product intensity momentum that we continue to achieve and the inherent churn benefits.

Strong security net additions of 25000 this quarter further supports our expanding product intensity.

Overall industry, leading external fixed net additions of 73000 were relatively steady year over year in spite of modestly higher churn as the market normalizes post COVID-19 restrictions.

This result, and these performance attributes reflect the strength of our unique and highly attractive bundled offers across our industry best portfolio of products and services that is buttressed by our ever expanding broadband networks or <unk>.

Leading customer centric culture, as well as our strong and highly differentiated social capitalism attributes that truly do underpin ARTEL its Brad.

Now, let's take a look at our Telus health operations.

Including one month of life works, we realized health services revenue in the third quarter of $225 million.

This illustrates the meaningful scale of our health operations as we improve health outcomes for citizens through access to better data analytics that render better health information.

This includes our health care programs that now cover over 16 million lives inclusive of Lifeworks and reflecting organic growth of four 2 million lives over the third quarter of last year.

It includes executing 143 million digital health transactions during the quarter up 4% over last year.

And it includes earning $1 7 million, new virtual health care members in the last 12 months, increasing our virtual health care members to $4 million, which is up 74% over the prior year.

On September one we completed our acquisition of Lifeworks earlier than anticipated. We are pleased to welcome their employees and customers into our Telus health family and of course, we immediately commenced integration efforts to combine our respective skills and.

<unk>.

This powerful combination creates a globally, leading end to end digital first employee primary and preventative health care mental health and wellness platform covering more than 60 million lives in Canada, and well beyond across 150.

Countries.

Customers can now benefit from our team's steadfast focus on providing exceptional customer experiences over our world, leading broadband networks and the data that they generate customers will benefit from our consolidated engineering talent that will incorporate best in class data platform.

Acknowledges the positively impact health outcomes for employees and their families and.

And customers are going to benefit from our significantly expanded economies of scope and scale as we drive value creation and the significant expansion of our health capability set.

This includes complementing life works international relationships with Telus International's proven expertise in digital transformation and client service excellence as well as their expansive client base and delivery teams that spanned 30 countries to extend our offerings to cut.

<unk> well beyond the constructive Canada.

Our combined organizations guided by a shared set of values will provide employers with convenient innovative and effective data driven primary and preventative care solutions for employees and their families to proactively manage their health and optimize their wellness.

This includes support for their mental health, so that they have the opportunity to lead their healthiest and most productive professional and personal lives.

<unk> brings significant benefits to Telus health and we are focused intensely on integration efforts aimed at crystallizing these benefits.

These include meaningful synergies of $200 million or more over the next three to five years inclusive of revenue synergies and as well approximately $60 million in near term cost and operational synergies.

Let's turn now to tell us agriculture and consumer goods.

Our team drove revenue growth of 29% over the same period last year as a result of our ongoing efforts to integrate and grow this compelling business and all of the assets that we are developing across agribusiness animal health and consumer goods and trade optimization.

<unk>.

We are creating significant value as the leading provider of agriculture, and consumer goods technology solutions around the world as we advance the sector's efficiency and effectiveness, including food quality production waste reduction.

Food and retail execution and trade promotion optimization, all being driven through better data analytics.

Let's now turn and take a look at Telus International.

Earlier today Ti once again announced solid double digit revenue growth, coupled with leading profitability and significant robust cash flow in the third quarter.

Notably revenue increased by 16% on a constant currency basis, whilst EBITDA grew by 15%.

These represent solid results against the backdrop of ongoing global macroeconomic and geopolitical uncertainties.

<unk> continued focus on quality profitable growth powered by an attractive end to end set of digital capabilities positioned Telus international as a trusted advisor for Premier digital customer experiences and solutions for its over.

600 global clients.

Last week, <unk> announced an agreement to acquire Willow tree, a full service digital product provider that will significantly bolster ti's front end and design competencies and unlock attractive and significant cross selling opportunities whilst adding new.

New marquee customers and further diversifying ti's enviable list of client partners.

Importantly, willow tree will augment our go to market transformation capabilities in respect of digital cloud and software based services that are going to be highly sought after as we progress toward a period of economic recovery in the months to come.

Furthermore, and extremely importantly, willow tree software development capabilities will enhance <unk> ability to support and materially accelerate tell us its own ongoing digital transformation and as well support key product development.

<unk> across our business, particularly within health and agriculture.

Doug is going to have an opportunity to provide further commentary on both T Chek and Telus International's financials in just a minute.

In closing significant ongoing investments in our pure fiber and fiber networks alongside digital capabilities and data analytics in high growth markets are further enabling the continued advancement of our financial and operational performance strengthening our confidence.

And the robust outlook for our business and the long term sustainability of our industry, leading dividend growth program.

Importantly, the seven 2% year over year dividend increase announced today represents the 23rd increase since we initiated our multiyear dividend growth program way back in 2011.

Notably our program is now in its 12 year and was recently extended through 2025.

Since 2004, Telus has returned more than $22 billion to shareholders.

Including those shareholders that are saving for retirement or other life events or theyre returning relying on this money for their income.

This now represents over $17 billion in dividends since 2004, and this into <unk> equates to $16 on a per share basis.

Future dividend growth and the affordability of that growth is going to be supported by strong EBITDA and free cash flow growth supported by value creation across Telus International talent health and tell us agriculture, and consumer goods businesses as well.

Significant reductions in annual capital expenditures, beginning in 2023, leading to meaningful and sustainable free cash flow expansion.

Notably it will also be supported by enhanced efficiencies, resulting from the completion of our copper to fiber migration and continued retirement of our remaining copper infrastructure.

This is complemented by our increased digitization and the other revenue and cost benefits that will come from fiber ubiquity, which represents a significant value differentiator for Telus.

Lead on fiber Expansiveness, and we lead on Digitization and we lead on customer simplification all of those attributes drive significant efficiencies for this organization at the Opex and Capex levels.

Finally, I'd like to recognize the way our Telus team continues to demonstrate that when things are at their worst the Telus team has at their very best.

This is highlighted by our team's support for humanitarian and disaster relief efforts. Just this past quarter alone and of course, that's the culture and heritage of our organization and action.

Thus far tell us our team members that tell us for any future foundation and our customers have contributed nearly $1 million in cash and in kind assistance supporting those impacted by hurricane Fiona hurricane and flooding in Pakistan and the unrest in Iran.

Indeed, as a leading provider of mental health and well being services, we launched a free 24 seven prices support hotline through life works to support the Iranian community and their loved ones.

Furthermore to help customers stay connected to their family and friends, we waived all long distance and text messaging fees for those at home in Canada, reaching out to friends and families and Iran.

I remain exceedingly grateful for the Telus team's passionate efforts to support our communities across the globe as we strive to deliver outstanding results for all of our stakeholders further exemplifying our leadership in social capitalism.

And on that point yet.

Hand, the call over to Doug.

You, Darren and Hello, everyone, our third quarter results build on our consistent and long tenured operating momentum, reflecting continued execution excellence and supported by our high growth and diversified asset mix Mobile network revenue continued to show sequential improvement.

Q3, increasing by six 8% year over year, driven by strong customer growth and higher ARPA. Furthermore, as compared to the pre pandemic Q3, 2019 period Mobile network revenue has increased by seven 5% showcasing our strong consistent growth in customers.

Service Excellence, we continue to see already a steady improvement in roaming revenue.

With the Q3 amount of approximately 113% in Q3 as compared to pre pandemic levels and up from 103% in Q2.

These improving trends will continue to support our growth as we progress through the remainder of the year and into 2023.

Beyond Romy remained focused on driving sustainable <unk> growth by executing on our five key monetization strategy.

<unk> excellence in base management, maintaining our long standing approach to smart profitable loading and leveraging our leading churn trial profile within the competitive landscape.

Data revenue grew five 4% year over year or nearly 7% when considering the divestiture of our financial services business towards the end of last year.

Within fixed data residential internet revenue grew by 11% year over year as we continue to drive market share gains along side higher ARPA, while customers continue to move to higher speed tiers, and recognizing the compelling value and reliability of our superior pure fiber.

Bundled offerings.

At the beginning of September our team successfully closed the acquisition of Lifeworks earlier than anticipated accelerating the recognition of financial and operational benefits of the transaction health services revenue increased by 73% in the third quarter, including an $87 million contribution from Lifeworks.

The earlier closing date also allowed us the opportunity to accelerate the integration process months earlier advancing our ability to began unlocking the significant synergies of the powerful combination of Telus health and life works, including leveraging Telus International's extensive capabilities and client base.

Our planned acquisition of Willow tree significantly enhances <unk> digital services portfolio augmenting and scale.

In design and build capabilities and increasing its high value digital services mix and revenue per team member we expect the transaction to close in early January 2023.

Together these transactions represent important steps, we are taking to scale, our high growth technology oriented business.

Further setting us apart from our global peer group and adding capacity for value creation and diversification of our business.

At the segment level <unk> external revenue was up nine 3% over last year and adjusted EBITDA grew eight 1% for the quarter Lifeworks contract contributed approximately 2% of the growth in revenue and 1% on adjusted EBITDA.

<unk> external revenue was higher by 14% year over year, and adjusted EBITDA was up 36%, while margins improved 380 basis points to approximately 25%.

Altogether consolidated revenue increased 10% year over year, and adjusted EBITDA, 11% with margins improving by 30 basis points to nearly 37%.

Holiday net income was up 54% year over year, while basic EPS grew 48%.

This strong growth was driven by higher EBITDA lower financing costs, partly offset by higher depreciation and amortization.

And as it relates to the EPS higher shares outstanding.

During the quarter, we observed an unrealized benefit included in our financing expenses related to our virtual purchase power agreements totaling a $151 million on an adjusted basis. Excluding this benefit net income and EPS were higher by 20% and 17% respectively.

Free cash flow of $331 million was.

In Q3 was up 63% over last year, driven by higher EBITDA and a decline in capital expenditures from lower investments as we near the completion of our accelerated broadband build and as we start to align our run rate to a reduced 23 capital spend.

As outlined in our press release today, we are updating our consolidated financial targets for 2022.

Our domestic core telecom business continues to perform very well benefiting from our world, leading wireless and pure fiber networks and customer service excellence, we expect lifeworks to have a similar <unk> monthly percentage impact on revenue and EBITDA in Q4.

Our customer.

Our customer wireless contracts from lower mobile handset sales volumes were lower as a result of fewer customers requiring a new handset.

Our customer growth and within our existing base as well as the success of our certified pre owned handset sales.

This resulted in less handset revenue year to date and is expected to be lower than planned for the full year. When we set the guidance back in February .

This trend will be accretive to free cash flow is less handsets needs to be financed or subsidized than planned when we set our original guidance.

At Telus International the current macroeconomic.

Environment is influencing customer spending in the near term leading to a ti update on their outlook for 2022.

Fortunately Ti continues to target robust double digit revenue growth and a leading margin and cash flow profile. Please see <unk> announcement earlier today.

As we consider.

The inclusion of Lifeworks. The strong results that we saw in our current business the impact from the lower mobile equipment revenues as well as account for <unk> updated outlook. We are now targeting for the full year consolidated revenue to be approximately 8% we tightened the <unk>.

<unk> adjusted EBITDA growth to 9% to 10% capital expenditures for 'twenty, two will be expected to be $3, $4 75 billion, including additional capital for Lifeworks.

And free cash flow now being increased to approximately $1 3 billion.

Above our original guidance range of one to $1 2 billion more than offsetting the increase in capital Lifeworks did not have any impact on our higher free cash flow outlook for the quarter and the year outlook.

For full year impacts in 2023 of Lifeworks and Willow tree, we will be will be included in our February guidance release.

During Q3, the team successfully issued $2 billion of new debt securities across three different maturities, including our third sustainably sustainability linked bond, making tell us the larger largest issuers astellas sustainability linked bonds in Canada.

This offering was met with high investor demand within a very dynamic market environment and further demonstrates our strong success and access to the capital markets as well as advance our growth strategy importantly, our balance sheet remained strong at the end of the quarter. The average cost of our long term debt remained at a.

LOE of $3, 95%, reflecting how our team has successfully leveraged the low interest rate environment over the past decade to accelerate our growth strategy, including our meaningful investments in wireless spectrum, and our generational pure fiber build which is nearing completion.

We have a strong debt maturity schedule.

With an average maturity of our long term debt of over 12 years and no significant debt maturities until 2024, our balance sheet strength will continue to be further enhanced in 2023 with a meaningful increase in free cash flow generation.

At the end of 2022, our accelerated broadband build will conclude setting up tell us to see meaningful positive free cash flow for 2023 and capital expenditures declining to approximately $2 6 billion inclusive of approximately 100 million capex related to life works.

Shortly our capital investments are going to long term infrastructure based assets that will yield positive operational and financial results for decades to come.

As we progressed through the quarter and for the rest of the year and into 2023, our team remains highly confident of our growth trajectory and long term strategy to plan and further advance our leading growth profile building strong value creation, along the way Robert back to you. Thanks, Doug <unk>, we're ready for questions.

Yeah.

Alright first question comes from Maher Yaghi from Scotiabank. Please go ahead.

Thank you. Thank you guys.

I would say, it's hard to find a telecom company.

Sure market with this type of growth so.

Congratulation.

But that happens.

<unk>.

When looking at the balance sheet, then Doug you mentioned the strength that you see going into next year.

But one has to.

Maybe a question a little bit how fast can you de lever the balance sheet, because we have senior debt.

Ratio go from <unk> to about $3 six now if I include the.

The most recent acquisition.

Willow tree so.

Five is approximately <unk> <unk>.

In terms of the balance sheet, how should we look at the de levering process. How quickly can you deliver that balance sheet.

And in terms of the share count also we're seeing an uptick because of trip. So maybe you can give us a sense of where should we look at.

Those two metrics and 2023, especially with the spectrum auction coming up and my second question quickly on churn.

Can you maybe give us.

A view as to what caused the increase in churn is it mainly prepaid or you also saw an uptick in postpaid churn. Thank you.

Okay, Doug Doug will take the first part and then Jim will take the second.

I'll start at the back of your question and move forward. The drip we were going to keep in place until after the spectrum auction is over at the end of next year and then we will make.

Assessment after that date from a deleveraging perspective, all of the investments. We've made are extremely strategic there've been smart investments that provide long term benefits as Darren highlighted and I highlighted in fiber <unk> spectrum and acquisitions that diversify our organization.

Built for future growth and generate very very significant free cash flow into the future the reduction of the capital.

That we had discussed also leads to 2023 acceleration of free cash flow. So we will continue to delever very quickly.

Starting in starting next year Ti and you would have seen their leverage go up to three <unk> and it will delever very very quickly as well as they always do with low capital intensity. So from the fact that we've got the reduction in capital. We are growth engines from health to AG to Ti all contributing none of them around.

And the negative J curve anymore contributing to positive growth the execution within our base and the capital reduction we're very confident that we'll continue to delever in a very.

Quick and appropriate way.

And that's why we have the ongoing confidence in our balance sheet and the ongoing confidence in our business.

And on churn.

Postpaid churn was <unk>.

Seven six which was pretty much flat year over year.

Churn was $2 three six which was up 31 basis points and that was largely due to some trends in activations during the Rogers outage.

And.

And a bit of of the traveler segment.

So we were pretty comfortable we had very strong lifetime value again, and the one thing that I would like to mention.

As we continued our focus on premium loading, which is what's helping our domestic <unk>.

In the quarter, our premium brand net ports were up dramatically and we had two times the premium net ports versus any of our competitors.

And maybe one just quick top up to my answer I'm, just as a reinforce our maturities next year less than $500 million and after that again, it's a balanced maturity ladder. So we have very little.

Needs or requirements for financing over the next two years concurrently.

Thank you and next question please.

Yes.

Of course, our next question comes from Stephanie price from CIBC World markets. Please go ahead.

Hi, Good afternoon, just following up on <unk> question around the fiber investment cycle nearing completion, hoping you could talk a little bit about your thoughts on the uses of excess capital around AG health and return of capital to shareholder versus future M&A et cetera.

Hey, Stephanie.

Take this one you're quite correct if you look.

At our fiber footprint, the copper component within that.

Is in the low single digits.

Percentage and of course, that's going to unlock significant value for us on a go forward basis.

Number two we are entering a period, where the sources of cash are.

Going to chronically exceed the uses of cash.

In terms of this organization, we like our dividend growth model.

As the most efficient and effective form of returning cash to shareholders.

Secondly, we want to retire debt.

Along the way.

It's interesting to note that when we began the fiber build program.

Over a decade ago.

Our cost of debt and our average term to maturity at that time, the cost of debt was over 5% and the average term to maturity I think it was about five three years now.

Now, we've got a cost of debt around 395% on average and the average term to maturity is 12, one years, which profiled quite well the return of the.

Fiber in terms of revenue and margin generation versus the expense on the capital investment to bring it to fruition.

And then thirdly.

We want to put the money to work on selective M&A to support the continued scaling and value creation at Telus International at tell Us AG and Telus health.

So we would see us taking excess cash and putting that money to work as it relates to the key growth engines of the organization beyond the excellent value that we're creating right now.

Our core business the interesting thing about that latter comment is while we spend money.

To invest in scaling and growth at Ti Aegean Health Aegean health like Ti are also poised to return cash.

Capital as those valuations from a scaling point of view come to fruition and we think about undertaking public market events for both the AG and the health businesses. So I think it's quite an exciting two way story in terms of investment in valley.

<unk> and scale realized and cash returned yet again to to shareholders and that's what really differentiates telus on a global basis because.

I would challenge you.

To find another company in our sector that does as well as what we do on core growth.

Whether it's operational loading and customer service or the financial results that a company that or the fact that we have two growth engines, one on wireline and one on wireless.

And then complement that with exacting and exciting value creation on emerging businesses from Ti to health to AG, and then complement that with a dividend growth program.

That is now going on from 2011 through to 2025, I just don't see that diversified performance at core.

The exciting growth.

Prospects and possibilities across Ti health and AG and <unk>.

Then returning cash to shareholders at a level that really has no parallel and I think that eclectic combination really does make us unique.

That's helpful color, maybe just one follow up from me on the fiber rollout can you put your thoughts on the homes in your footprint that was not originally targeted by the fiber and how you think about rolling those out over time.

What do you mean the homes that were.

Were not originally targeted by fiber you're talking about on that side the fiber footprint that we would reach with <unk> wireless HSI AA.

Or converting those to fiber in the future I guess my other question, Okay, why don't I take a breakdown.

And hand, it over to Zeno, She's got a particular passion on this piece of subject matter.

Why don't you kick in and answers Stephanie's question.

Okay. Thank you.

I think the first thing I would say is that while our footprint completion, our footprint is nearing completion on fiber, we're continuing to make pure fiber investments. So as new home growth continues there are pockets of build that we are continuing that are within our core.

Capital guidance that Doug spoke to so we will continue to see footprint expansion within our peer fiber footprint and will continue to drive the copper to fiber migration with the speed and alacrity that we have done so far the second point is that we have a healthy wireless high speed opportunity.

<unk> that we developed several years ago and that will expand with the rollout of <unk>.

And that will continue to enable us to.

Be at the forefront leveraging new footprint in rural areas, particularly and then the third thing I would say in where our passion really lies.

<unk> point is around ensuring that we continue to drive rural and indigenous footprint, we've been very assertive in our applications on the Universal Broadband fund, where we have a high the highest level of completion against that portfolio against our peer group in terms of <unk>.

<unk> actual connected customers and it's a significant drive in our social purpose to ensure that we continue to achieve connectivity for our rural and indigenous customers and then there is such a great synergy there with the rest of our capabilities when you look at.

AG Tech when you look at health.

So we will continue to drive those investments and leverage our assets across fiber and <unk>.

Great sustained Stephanie because you've struck a chord with me, perhaps something that that I didn't realize.

Within the $2 6 billion capital envelope prospect of Lee in 2023, which will excitingly for investors see us take our capex intensity down into the low teens I didn't think I'd still be here to say that but there you go you're hanging around long enough, sometimes good things like that happen, but included within that $2 6 billion.

Envelope is hundreds of millions of dollars that will still be spending on fiber expansion.

And perhaps we haven't been as definitive about that as we should when we talk about expunging copper, it's easy for people to assume okay. We're just now going to halt our fiber build and stop that that's not the case, we will still be spending hundreds of millions of dollars on fiber expansion as well as fiber upgrades to <unk>.

Along the way so we can take one gig two five gig services.

10 gig, but I think that's exciting for investors to say well you can take your capex down to $2 6 billion and Youre still making material investments in both fiber upgrades and fiber expansion, which of course will eventually also reduce in time, along the way and the neat thing for US now in terms of fixed cost infrastructure is.

The incremental expense to upgrade to something like X GFS pond to get to those 10 gig speeds. It's a de minimis investment. So we really have broken the back of this challenge, but it does continue to include significant investments in fiber expansion and upgrades.

Great. Thank you. Thanks.

Stephanie next question.

Of course, our next question comes from drew Mcreynolds from RBC capital markets. Please go ahead.

Yes, thank you very much and good.

Good afternoon.

Good morning, So two for me first on the fixed data services revenue growth.

And I guess in the deck you exclude th th.

From that I mean, obviously very good looking at your core telecom business. So I appreciate that disclosure and I think Doug in your remarks, you talked about 11% growth in consumer or residential.

So the question around that dynamic I think qualitatively, we all understand the drivers of that just because we don't know the ebb and flow.

Is this something you're confident in sustaining through let's say the next year or so and then secondly.

And separately.

Obviously cost inflation is something that needs to be managed by everyone.

But when I look at Telus.

It does appear that you are further along euro appears on Digitization and that journey for tell us.

Stuff like cloud migration et cetera. So just wondering if you can give us an update on where exactly you are on that journey.

As you look forward. Thank you.

Alright.

Why don't you hit the.

7%, 11% and the diversity of quality performance that underpins the sustainability of that number.

We do expect to see a sustainable proportionate to that as we're getting more of our customers on fiber as we've talked about you do get a higher <unk>. In addition to the.

The other benefits of cost reduction and and churn reductions.

<unk> seen good loading.

On on our intranet and security base through that period.

And having the product sets that we have that we're able to bundle.

On the <unk> side through.

Through the products at the best in market, we're going to continue to see that growth at very good levels along the way.

And then you are seeing a selection to the higher rate plans and unlimited speed tiers as we talked about so seeing the benefits of our fiber initiative.

Going to continue to drive that for the foreseeable future.

And on the inflation front.

And I think.

For me this is maybe the.

Most exciting set of attributes as it relates to value creation tell us versus our peers.

We like what's going on on wireless in terms of what we're seeing on the <unk> improvement upfront both absolutely would tell us.

And relative to our peers, given our focus on quality.

Our strength as it relates to both bundling and retention.

Like the upside in terms of roaming, but as I noted in my comments.

Recurring revenue within the domestic context continues to be quite strong.

And I am very bullish.

On a nine digit Iot business within the <unk> construct and so I.

I think that looks pretty healthy then I turn to look at the cost infrastructure for.

Our wireline business.

And that confidence grows clearly as a result of bundling, we're enjoying cost economies of scope.

And given the broadband connectivity we have.

The marginal cost as it relates to adding new products to that continuum is extremely attractive and we will be adding new products to that continuum. Now. We're also launching a new entertainment platform with our Opus project that will materially reduce our cost infrastructure and term.

Of entertainment delivery.

Then you look at the conversation that we've just been having on on fiber.

And just plow through the attributes the average margin per home on fiber is 20% better.

Our historical copper footprint that the lifetime revenue on fiber is 30% better.

To serve on fiber is significantly reduced the facilitation of Digitization to your point and the entire automation of the product and service continuum is made a hell of a lot easier by fiber.

Even if I've taken ESG investing bent to this.

The energy appetite of fiber versus copper is 80% less.

So that's.

Thats quite a compelling set of attributes then you look at the <unk> component, which was.

A pretty unique tell the story it was a hard road to hoe for us since 2014 with the economic impacts in the west in Alberta economic impacts on the sectoral front within oil and gas that business was profit dilutive.

For many many many years since 2014 and that business now has turned profit accretive.

And nice to see the profit trajectory on <unk> being at 3% EBITDA growth and I would look over the next 12% to 24% to 36 months for us to take that EBITDA growth to 5% or greater.

We are much further progressed on our digital program at Telus than our peer group.

And it's not dissimilar to the story on fiber.

We're not saying that we have some intellectual property.

Not saying that we know better we just started early and stuck with it.

The reason why we are where we are on the fiber front right. Now is we have the guts to make that decision in 2012 in 2013, and we were early movers on digital.

Where our customers first organization and we've got a great leadership team that's dedicated to strong execution and we just leaned into it and we've made a hell of a lot of progress along the way and we did it with a purpose. So it wasn't just digitize digitize. It was digitization to do two things improved customer service excellence and simplify the organization.

<unk>, because we were overly complex and with simplification. It's a four point game, you get better customer service and you get better cost reduction.

And then next to that we've got very attractive post acquisition integration synergies on Lifeworks.

I think you might've noticed it used to be $150 million than it was $200 million and I was quite purposeful in the comment, saying, it's 200 million plus now and we're off to a pretty quick start on $60 million of near term operational and cost synergies and of course, then we've got our own tell us cost efficiency program when you <unk>.

Marry that up with our Lifeworks post acquisition integration synergies, that's afford a $500 million cost improvement program that we wanted to bring to fruition over the next 36 months.

And then next we've got Ti.

Who what are the telco in the World do you know that has an organization like Gi supporting it so when I talked about why we lead on digital Gi is a big big Big answer to that solution. They have been aiding and abetting the acceleration of our digital program, what a fantastic resource.

To have at our fingertips and they helped us from hygiene, that's self actualization on the hygiene front, they help us with labor arbitrage and what it does and on the self actualized state they accelerate not just our digital progression, but our cloud transformation and they do it with the quality been Gi is not cheap and cheerful, it's all about customer.

First customers first in terms of the excellence that they bring and you can see that within their own margins. They are highly differentiated in that regard next it's not just been opex storage. The Capex story, we purposely forecasted for 2023 that Holistically wireless and wireline we are heading into the low teens for capital in <unk>.

City.

Two things.

Maturation of our major investments in broadband and the fact that our asset composite at Telus is changing because of Gi health and AG in the Digitization of the organization and increasingly we are becoming a software as a service organization and again I think we lead our industry in that.

And then the last thing in terms of inflation fighters and the like we've got emerging value in scale and margin and profit accretion coming from health and AG. They are not dilutive right now and they'll become just increasingly accretive in the future and we're looking to those businesses to deliver double digit EBITDA growth across.

The board.

Comprehensive.

Understood. Thank you guys.

Thanks Drew Hi next question please.

Of course, our next question comes from <unk>.

<unk> from <unk> Zhang Please go ahead.

Yes, happy Friday, and thanks for taking my question I guess with the Willow tree acquisitions.

This signals a bit that.

Growth will increasingly come from the tax side not that its a total surprise, but if you can please discuss a bit how you see the exposure astellas to telecom evolving in the longer term. Thanks.

Okay, we've got.

Jeff on the call and given that.

He has dedicated now the rest of his life to growing value for military Jeff Why don't you answer that question.

Thanks, Darren happy to thanks for the questions your AUM.

Willow trees client base is rather complementary to Telus international is that a number of ways.

<unk> in particular, we only have about five shared customers. So while they certainly do support clients in the tech sector. They also have clients in communications and media and healthcare and life Sciences financial services consumer goods travel and hospitality.

So we don't see that actually.

Intensifying our client concentration around existing verticals, particularly tech.

Where we're today circa 60% of our customers at Ti between Tech and games.

E Commerce and Fintech, they actually improve.

Our client concentration profile.

500 basis points.

So we see it as very complementary.

As I shared on our Willow tree specific investor call last week and as I commented on the earnings call just barely an hour ago, we think the revenue synergy opportunity by cross selling Willow tree services into <unk> customer base and in particular, helping to accelerate and amplify our.

Our support for Tullow has his own digital transformation journey that both Darren and Doug spoke to earlier as well as all of our other clients and then vice versa, our ability to sell <unk> services into the Willow tree base.

We have an example, we had customer diligence call as part of the transaction, where I spoke directly to one of willow trees long tenured existing clients and when they learned a little bit about the combination of <unk> Trust.

Trust and safety and content moderation capabilities in particular, they've got quite animated and excited.

There is a reason why we think this transaction is going to be so so exciting for us both.

On the road.

Great.

Well, we're talking about Telus international maybe for managing the workload at Telus with the more uncertain demand.

I'd tell us or international can you maybe use excess capacity to accelerate the lifeworks.

Gration or is it more time to proceed with caution maybe.

So we work diligently to keep our entire global workforce as fully utilized as possible.

Notwithstanding.

Macro economic uncertainty and some slowdown in some of our larger tech clients E Commerce and Fintech clients in particular.

<unk> is still out looking 16% to 18% growth top line revenue on a constant currency basis.

Where we have some programs slowing of ramping down our first port of call is to absolutely repurpose those talented team members into other areas of opportunity and that absolutely could be supporting and accelerating the lifeworks integration and transformation. The other parts of the Telus organization.

When we look to cross pollinate some of our expertise and experience serving tell us two non tell us accounts and then vice versa repatriating best practices in order to be a better partner to both tell us in all of our other clients.

But I can tell you as a customer of Ti.

We're extremely excited by the Willow tree acquisition and what it can do for us on the design and build front and how thats going to get manifested within our digital cloud and software development platforms and I think it's also exciting to highlight that whilst the willow tree customer list is highly complementary to ti.

There is a greater and a beneficial overlap between the Willow tree customer list and the customers that both health and AG. There is a very interesting overlap there that we are looking forward to exploiting.

Great. Thank you.

Thanks, Jerome next question please.

Of course, our next question comes from Vince Valentini from TD Securities. Please go ahead.

Yes, Thanks very much question on T. Chek segment adjusted EBITDA margins additional in first quarter of this year. They were up 30 basis points year over year second quarter. They are up 50 basis points now in this quarter. They are down 40 basis points year over year is that just a lifeworks dilution Doug or is it.

Anything else, we should think about there and then maybe more importantly can you give us any thoughts on how much of an upward ramp there should be in that in 2020, Caribbean and beyond especially when Youll fiber holds as Darren just said there is 20% higher margin than the copper homes in Europe . We've done the coffer. So should we see a big step function up in those two.

Tech margin soon.

Yes, so yes, it is substantially the lifeworks waiting into our results.

And yes, we see upside in margin both as Darren discussed, but also the other areas, we talked about health care in AG as being accretive and Thats, a double digit accretive on EBITDA going into the future, which was not the case in the past.

And you'd see business and the business segment that we talked about also having slower growth that is recovering very very well.

So.

Looking forward, we're very optimistic on that margin enhancement there might be some weighting impacts along the way and we will we will try to be.

Very.

Transparent on that as we move forward, but the overall water level level will continue to increase.

Thanks, and just to clarify Gary did you say 400 to 500 million in incremental cost savings from new efficiency programs.

Yes, I did the combination of what <unk> is doing in our own right.

Due to the synergies on Lifeworks, that's exactly correct yes.

One less anti I'm sorry, Vince.

Small top off and the only other thing was our revenue on handset revenue did increase a bit in Q3 from Q1 and Q2, so as we add a few more renewals during the back to school special.

They would actually be low margin as well so a little bit attributed to that in addition to lifeworks.

Fairpoint lots of tiny clarification Doug.

The accelerated Capex for this year was $750 million was the plant I believe 691 has been spent through the first three quarters does that imply.

I was off significantly in the fourth quarter to only about $60 million and then you're done.

Yes.

Well thank you.

Thanks, Vince behind next question. Please.

Alright next question comes from Arvind <unk> from Canaccord Genuity. Please go ahead.

Thanks for taking my questions.

Two for me.

Just to go back to the fleets and.

Geez.

Turn that you talked about when you kind of look at the next 12 to 18 months call. It low hanging fruit sort of what's achievable during sort of the near term there and maybe some granularity around where that could come from is it is it is.

The plan to originally sort of attack the Canadian opportunity given those enterprise relationships or is it the U S.

Yes.

For some revenue synergies as well almost straight off the bat I wanted to get your thoughts on that and then.

My second question, a smaller one on the B to B number that <unk> provided to 3%.

Are you able to kind of is that including wireless or are you able to provide to ex wireless number that just kind of give a sense of what the enterprise wireline trends maybe.

Okay. Thanks.

Thanks for that.

Michael We've got our Chief operating officer for Telus health on the call.

And he has been leading the way.

<unk> integration and the realization of the synergy so I'm going to ask Michael to comment and I'll ask Michael also in addition to synergy realization and the sources.

As it relates to the synergies I would also like Michael to speak to the significant and exciting cross sell opportunities that exist.

Between tell us tell us how life works and Telus International Michael over to you.

Thank you Darren and thank you for the question.

So, perhaps let's start with <unk>.

Time demand for health and wellbeing services has never been higher and the combination of telehealth in Lifeworks.

Our improved health outcome.

<unk> is a better preventative health and wellness experiences for people worldwide.

Our teams continue to success.

The integration and.

And we have a solid start behind us to continue to drive momentum on significant growth opportunities as we go to market as one team.

Now we're confident that we will hit the $200 million of total synergies over the next three to five years, given that we've already identified $60 million in near term cost synergies thus far.

And Moreover, our collective sales teams in collaboration with Ti and TBS have already identified.

Identified more than 130 joint sales opportunities in the weeks since close.

And I would just add that our focus of course is Canada and North America, and then exporting from our North American strategy to rest of world.

Okay and for the answer to the next question just given you asked for the clarification.

That 3% EBITDA growth what's holistic.

So that was wireless wireline combined.

Holistic across our <unk> segments, so from small bids to mid market to enterprise.

Public sector, but <unk> why don't you give a little bit of additional color on that front.

Okay. Thanks, very much Darren.

Our <unk> business continues to accelerate profitable growth and is actually growing.

Not only EBITDA, but also revenue and cash so we continue to retain and grow our customer base given.

The reliability coverage and.

And speed of our global leading networks, both wireless and pure fiber.

And of course, our industry, leading customer experience and are positively differentiated solutions. So our vendor to your question, we're continuing to outrun our legacy service revenue decline.

Strong growth in.

Both market share expansion as well as increased product penetration both in wireless and wireline our churn remained strong and.

Low and we're well positioned to lead in new <unk>, Iot and industry solutions capabilities. So we expect to see continued acceleration of our profitable growth.

As we close off the year and progress our strategy further into 2023 and that profitable growth is going to come from both improvements in.

Our fixed our wireline segments as well as our wireless segment. Thank you.

Yeah.

Thank you.

Thanks every vendor we have time for one more question. Please.

Alright next question comes from David Joyce from Barclays. Please go ahead.

Thank you I just wanted to follow up on one of the questions earlier on.

The capital expenditure plans your footprint.

Granted you can still do some more fiber expansion.

With new homebuilders, but how can we think about long term how much more of.

The population or geography, however, you can help us quantify it.

Expand what's what's your available territory, where you could still be.

Growing fiber over or <unk>.

<unk>.

As a viable alternative.

How can we think about that the expansion of your footprints from here. Thanks.

Not really given any.

Public guidance on that.

But maybe I can help you with some quick parameters.

Firstly, we don't have the singular broadband solution and fiber we've got two broadband solutions one fiber.

<unk>.

I think it's really down to the organization to determine what is the <unk> optimal combination of expanding fiber, but also leveraging fixed wireless along the way.

So.

Roughly speaking.

Over the longer term across the totality of the population within our build territory.

Seen fiber to get to maybe 75% of the.

<unk>, where we would use wireless broadband to cover the remaining 25% of the population I think thats not a bad rule of thumb along the way.

There are some adjustments to that.

If you look at.

What we can do on government programs and leveraging government programs to expand our fiber footprint I think thats, an opportunity that would allow us to take fiber penetration deeper into rural communities.

If you look at what we would do maybe on joint cost sharing.

In terms of fiber expansion on rural whether it's with the community or whether it's with the electricity company.

Those are also exciting opportunities to leverage scope economies, along the way or stronger commitments of the communities.

Tony Garen and his team have done a fantastic job.

In terms of our indigenous coverage.

If you look at Telus, we are a global leader in bringing broadband and digital capabilities to indigenous communities in rural areas across Canada, we have a footprint that's second to none in that regard so again that would see us.

Expanding the penumbra of our fiber footprint and then lastly, it's down to some hard economics how.

How much bandwidth do do customers need.

Many services are they going to take and if the bandwidth and the services justify it then we can expand the fiber build along that particular path and of course, the other thing that gets forgotten is that <unk>.

Fiber and <unk> fixed wireless are not just for consumers.

The extent to which we can leverage b to b opportunity, particularly within the SMB space or certain public sector areas as well that gives us an opportunity for further expansion, but that would give you a sense of how far we could go on the expansion front and how we could smartly leverage wireless broadband.

Bad the close off the final mile.

Alright I appreciate it thank you.

Thank you David and thank you everyone for joining US today, please feel free to reach out to the IR team with any follow ups take care and have a nice weekend everyone.

Everyone. This concludes the 2022 Q3 earnings conference call. Thank you for your participation and have a nicely.